Life insurance policies are contracts that provide a lump sum payment to a named recipient upon an individual’s death. However, a life insurance policy can also be used to set up a trust near Tracy, which reduces or eliminates the federal estate tax owed on the money paid out of the life insurance policy.
This video explains how estate taxes affect life insurance proceeds and how a life insurance trust can be a valuable estate administration tool. The trust is used to pay the premiums of a life insurance contract; when the insured individual passes away, the proceeds are returned to the trust. Working with a trusted attorney during the estate planning process can help you determine if this type of trust is right for you and your family, as well as ensure your trust is compliant with all inheritance laws to minimize or even eliminate estate taxation.